WhidbeyHealth was unable to obtain an $8-$10 million loan that officials were expecting to receive from a health care lending firm in order to bridge a funding gap.
Yet officials at the public hospital district remain optimistic that the doors will remain open. Conor O’Brien, a spokesperson for WhidbeyHealth, said officials have identified many areas of opportunity. He wrote in an email that the administration has been in “dedicated strategic recovery planning” since Interim CEO Mike Layfield started on Monday.
“We are continuing to explore other funding options, including loans, grants and other innovative solutions,” a hospital memo obtained by the Whidbey News-Times states. “HealthTechS3 is engaged to assist.”
Last week the hospital board signed a contract with HealthTechS3, a strategic hospital services firm. The company will provide a variety of management services aimed at making the organization more efficient and effective, as well as finding candidates for the permanent CEO and CFO positions. Layfield works for the company but also reports to the hospital board.
Officials at WhidbeyHealth have been seeking a short-term loan in order to make payroll and cover other costs until revenues from the property tax levy come in. Officials said they should receive half of the tax funds, about $8 million, by the end of April.
The hospital was turned down for a loan by two local banks because it presents a default risk. Hospital officials even asked Island County commissioners to co-sign a loan, but the commissioners were unable to do so.
Last week, Moody’s Investors Service downgraded the hospital district’s bond rating to below investment grade and warned that the district would be unlikely to make payroll after March 19 through mid-May unless it secures a $17 million loan or line of credit.
O’Brien, however, said Moody’s doesn’t take certain financial aspects of the district into consideration and the loan the hospital seeks is considerably smaller.
The hospital turned to Siena Healthcare Finance, a firm that specializes in lending to health care. The firm was unable to approve the loan, however, due to “local laws about leveraging accounts receivable as a public entity,” the memo states.
WhidbeyHealth is applying for funding earmarked for distressed health care organizations under new state legislation. The law makes $8 million in grant funding available. The Washington State Hospital Association is confident that a grant will be awarded to the hospital district on July 1, the memo states.
The hospital has been in upheaval since the medical staff voted no confidence in CEO Ron Telles, as well as the chief operating officer and hospital attorney, in early February. Telles terminated four other members of the executive team without consulting the hospital board.
The hospital board then fired Telles. At the same meeting, the board members learned that the hospital’s financial situation was more perilous than previously thought and that the financial records had widespread errors.
